Earnings call transcript: First Majestic Silver Q3 2025 misses forecast

First Majestic Silver Corp reported its Q3 2025 earnings, revealing a significant miss on both earnings and revenue forecasts. The company recorded earnings per share (EPS) of $0.07, falling short of the expected $0.11, representing a surprise of -36.36%. Revenue was $285.1 million, below the forecasted $311.86 million, a miss of 8.58%. These results led to a pre-market stock price decline of 3.37%, with shares trading at $11.17.

Key Takeaways

• EPS and revenue fell short of analyst expectations, causing a negative market reaction.
• Despite the miss, First Majestic reported record production and cash flow for Q3.
• The company maintains a strong cash position with over $560 million.
• Strategic acquisitions and exploration projects continue to be a focus.
• The company is on track to meet its 2025 production guidance.

Company Performance

First Majestic Silver achieved record financial results for Q3 2025, highlighted by record silver production of 3.9 million ounces and a year-to-date total of 11.3 million ounces. The company also reported a record cash flow of $140 million and an operating cash flow of $98 million. Despite these operational successes, the financial results did not meet market expectations, leading to a negative stock market reaction.

Financial Highlights

• Revenue: $285.1 million, below the forecast of $311.86 million.
• EPS: $0.07, missing the forecast of $0.11.
• Cash flow: $140 million, marking a record for the company.
• Cash position: Over $560 million.

Earnings vs. Forecast

First Majestic Silver’s Q3 2025 EPS of $0.07 was 36.36% below the forecasted $0.11. Revenue was also below expectations, coming in at $285.1 million compared to the forecast of $311.86 million, an 8.58% miss. This performance marks a deviation from previous quarters where the company had met or exceeded expectations.

Market Reaction

The stock price of First Majestic Silver fell by 7.87% to $11.17 in pre-market trading following the earnings announcement. This drop reflects investor disappointment with the earnings miss. The stock is currently trading closer to its 52-week low of $5.09 than its high of $15.69, indicating a challenging market environment for the company.

Outlook & Guidance

First Majestic remains optimistic about the future, projecting strong performance for Q4 2025. The company plans to increase throughput at the Los Gatos facility and expand operations at Santa Elena. Updated resource estimates for the Navidad project are expected by March 2026. The company also hinted at potential share buybacks, seeing current stock prices as an opportunity.

Executive Commentary

"We came out with one of the best quarterly—well, actually, the best quarterly financial statement we have ever had in the company’s history," said CEO Keith Neumeyer, highlighting the operational achievements despite the financial miss. Neumeyer emphasized the company’s focus on efficient silver extraction and meeting production guidance of over 30 million silver equivalent ounces.

Risks and Challenges

• Continued pressure on earnings and revenue could affect investor confidence.
• Ongoing tax dispute with the Mexican government remains unresolved.
• Market volatility and fluctuating silver prices could impact future performance.
• Integration of acquisitions like Los Gatos presents operational challenges.
• Exploration and development projects carry inherent risks and require significant investment.

Q&A

During the earnings call, analysts focused on the potential for share buybacks, reflecting interest in capital management strategies. Management deflected questions about the ongoing tax dispute with the Mexican government, leaving some uncertainty in this area.

Full transcript - First Majestic Silver (AG) Q3 2025:

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the First Majestic Silver 2025 Q3 Financial Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. If you are participating through the webcast, you can submit a question in writing by using the form in the lower section of the webcast frame on your screen. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Mr. Keith Neumeyer, President and Chief Executive Officer of First Majestic Silver. Keith, please go ahead.

Keith Neumeyer, President and Chief Executive Officer, First Majestic Silver: Okay. Thanks, Operator, and welcome, everyone. That’s how I’ll dial in today, and we’ll likely be listening to this recorded over the next few hours or next few days. What’s turned out to be what we thought was going to be a fantastic day for us, putting out record Q3 numbers. I think we used the word record 18 times in our news release. Yet, obviously, the focus today is on this tax issue that came up or has been there for years, which I’ll address a little bit. As the market was opening this morning, I saw a headline come out of SilverSeek. I’m not sure who wrote that headline, but the guy’s obviously an idiot. I then saw, unfortunately, TD put out a statement as well. Nothing against TD.

TD has been a great financial partner of First Majestic for quite some time, a decade. Their analyst, unfortunately, came out with the most bonehead headline that I’ve probably ever seen from an analyst in my career. I’ll read it to you. It says, "Q3 results in line," which is good. Focus on ongoing tax reassessment, which is completely bullshit. Wayne, you should know better than that. Management is not focused on taxes. First Majestic is a mining company. Our job is to get silver out of the ground in an economical fashion that’s following the environment and our social responsibilities on site at the different operations that we do. We look for ongoing efficiencies on trying to reduce our costs and create wealth for our investors. That’s our job.

The tax dispute that seemingly some people are focused on today has been with the company for 13 years. There’s no change. We continually work with the Mexican government to resolve the issue. I can tell you there’s at least weekly meetings that occur in discussions on this particular item. I can also tell you that the Canadian government is now involved in discussions with the Mexican government, which is quite nice to see. I can tell you our team of experts over several law firms and consultants and inside staff pay a lot of attention to this, obviously. It’s not what we view as a material issue for the company. Whenever the issue does get resolved, we will put out disclosure to discuss further these items. We do do disclosure.

Over the last decade, or the last eight years, pardon me, we’ve had disclosure in our financial statements in regards to any potential liability in the business, including this tax issue. It’s fully out there in the public. We do get questions from institutional investors from time to time, and we answer those questions. We’re completely and always very, very transparent. We did update our language in our financial statements, our MD&A, and we put out some language in our news release today just to bring shareholders up to date or investors up to date. That’s where we are. We’ll continually work with the Mexican government to further resolve the issue at hand. Timing, who knows? It could be another year. It could be another two years. We have no idea. It’s been going on for 13 years. There’s obviously some focus on this.

Going back to my earlier comment, I can tell you it’s definitely not a focus of management because we don’t look at this tax issue as material to the business in any way. Interestingly enough, for those who actually want to dig a little bit deeper, the President of Mexico actually had a news conference on Friday, one of her regular news conferences. One of the reporters asked her about this particular issue because, as you can tell by some of the press, you’ve got these sensational headlines showing up. They’re trying to sell newspapers or whatever the heck they’re trying to do that have completely misrepresented the situation. The President of Mexico has said that the issue still remains outstanding and negotiations are still underway. I think that’s probably the most accurate statement that’s been made public from the Mexican government.

Unfortunately, the press did not pick that up. Nevertheless, that is the facts. Also, being in Mexico for 22 years, I think we are probably one of the most well-positioned companies in Mexico to handle such issues. We need to focus on getting the answer out of the ground. That is what we do. We came out with one of the best quarterly—well, actually, the best quarterly financial statement we have ever had in the company’s history. The analysts are focusing on completely the wrong thing. I should have introduced the people that are on this line with me. As you can probably tell, I am slightly irritated. We do have Steve Holmes, our Chief Operating Officer, online. We have also got David Soares, our CFO, online. We also do have Samir Patel, our Corporate Counsel, there. Mani Alkhafaji, what many of you probably know, our VP Corporate Development.

Darrell Rae, Manager of Investor Relations, is also online. If questions do come up that I elect to pass on to them, I may elect to do that. We will not be taking questions on the tax issue because I do not think it is appropriate in a call like this to have those types of discussions. There are several moving parts and things going on behind the scenes that are constantly occurring and have been occurring over the last eight years. Our disclosure is our disclosure, and we are not willing to go beyond the disclosure that we currently have in our financial statements, our MD&A, and our news release. Let’s talk about some positive stuff, the stuff that we have really been doing as a company that investors should really be caring about. I have got a presentation in front of me, and I am on slide two of the presentation.

We had a record silver quarter, silver-producing quarter, 3.9 million ounces, 11.3 year to date. The revenues in the quarter were another record quarter. As I said, we said record 18 times in our news release. There is just record after record after record. Cash flow is record $140 million. We have a record cash position. We have over $560 million in the bank. Our mint has had a record quarter as well. The money is coming in, and the business is doing extremely well. We are dealing with mining, of course, but it is hard to knock the third quarter. I am very positive that we are going to end 2025 on a very positive note, having a very good Q4 as well. Without getting into details and reading everything on the slide, the slide presentation that I have in front of me is on the company’s website.

For those interested parties, feel free to have a look at it. If you do have additional questions, feel free to call the company, and we can get into further details. Going on to slide three, you see the growth in silver ounces. As I said already, our record silver production, our costs have come down, which is fantastic. You’re seeing a lot of cost creep within the mining sector, which I’ve noticed through other companies putting their financials out. For our costs to come down was really nice to see. Jumping to slide four, we’re hitting all the metrics in our guidance. We’re three-quarters of the way in, or he says September 30th. We’re three-quarters of the way into the year, and we’re right on track with all the metrics that we put out in our guidance that we released in July of this year.

We’re on track to meet all of our guidance, north of 30 million silver equivalent ounces. I think all of you probably know the breakdown: 55% silver, 35% gold, and 10% in the form of lead and zinc. Our purity is there, and we remain the purest silver company in the space of the silver players that all of you are very familiar with. Jumping along to slide five, Los Gatos was a big acquisition for us that closed in January. Bringing all the systems in place, bringing the First Majestic way of doing business took some time. SAP and other systems that we brought over from corporate, from First Majestic, have now all been implemented now. It’s nice to see. We have a plan to get throughput up to 4,000 tons a day, and that plan is being put together now.

Look for our guidance in January 2026, and you’ll see more color on our budgeting to achieve this. Los Gatos has been a great asset for us and a super great addition to our portfolio. Jumping to Santa Elena, everyone knows, I’m sure most of you who are listening today have watched our news releases. Great exploration results. Two major discoveries in the last 12 months, which is pretty unusual. You don’t normally see two discoveries that close to back, but the Navidad and the Santo Niño discoveries are huge, and will add multiple years to the life of mine of this operation. Again, look for guidance in January on some costs that we’re going to be implementing over the next couple of years to get into those areas of the property to bring that ore into the mill and maintain or potentially even increase.

Production at Santa Elena over the next three, four, five years. That is pretty exciting. At San Dimas, it goes without saying that we have seen some pretty substantial improvements, quarter over quarter there. Costs are now coming down, production’s going up. It is now within budget after a challenging previous couple of years, which all those issues are now behind us. It is really nice to see San Dimas back on track. We have got some plans there to continually expand that operation and look for further guidance in the quarters to come. Looking at La Encantada, our smallest mine, which is less important of the top three, we are changing the mining operation there to sub-level caving. It is pretty interesting, and it is going to reduce costs and help that operation out quite a lot. That is being implemented now and will be fully up and running by Q1 of 2026.

Look for improvements and looking at Tata in 2026. Jumping to slide six. I’ve already covered the revenue, record revenue. I saw one of the analysts come out and say there was a miss on revenue, which is not sure what analyst that said. Anyway, the 758,000 ounces of silver that we kept in inventory and the 3,900 or almost 4,000 ounces of gold, that’s $50 million in revenue that we held over the quarter. Our shareholders want to see that. It’s a lot of embedded revenue. Some of that revenue will show up in Q4. I think the analysts that follow the company should take note of our inventory levels because it is something that we have focus on. As a silver gold company, I think that.

Our input from our investors and shareholders worldwide want us to see inventory levels at these types of rates. It is very positive. We could all, obviously, it is our choice. It is like cash. If we do want to convert those ounces into revenue at any time, we could do it quite easily just on a phone call. There is really $55 million in net earnings that would have showed up. Oh, pardon me, that is in relationship to the securities that we have been monetizing. Another bullet point. We do treat our portfolio, I gather, maybe in a unique way. We do not put it on our balance sheet. We have virtually our entire portfolio in other comprehensive income. We do monetize that, and we have been monetizing that.

If the analysts would like to look at that, maybe they want to focus on that number as well because I think it’s a quite important number. There’s a lot of cash sitting in our reserves in the form of marketable securities that I don’t think people take into consideration. There is a slide coming up, which I’ll point out again, that shows that value. Our safety performance has been very good, and our sustainability has improved as well. We’re one of the best-producing mining companies in the space and recognized by the different agencies, which is obviously nice to see. Jumping along to slide seven, this points to my previous comment of marketable securities, which is $140 million sitting there. That’s as of September 30, and the market’s improved even further since then.

Who knows what that number’s going to be as of December 30th? It is a significant amount of our liquidity. It is as a result of our deals we’ve done on the M&A front over the last couple of years, which I think is pretty helpful for the business overall. Jumping along to slide eight. Again, another record. I’ve already touched on records, but $98 million in operating cash flow. Obviously, pretty significant. Los Gatos was not—pardon me—Los Gatos was a significant contributor to that, which is obviously fantastic. It’s great to see. Going to the next slide, slide nine. Our EBITDA. Another record, $128 million in EBITDA. I’m not going to go over each of these items because if you’re looking for further details on all the bars here, I’m not going to bother covering them.

If you do have further questions, feel free to talk to Darrell or Mani at any time you wish to. Jumping to our next slide, the dividend policy. As all of you know, the dividend’s intact, and obviously, with our significant cash balances and our significant portfolio, actually, I’d like to see that dividend increase, but we’ll see how that transpires over time. Looking at slide 11. The integration is pretty well done. There are a couple of items that we’re still working on, but look for increased balance sheet improvement in Q4. I would expect to see that as a result of our production and obviously metal prices. We’re still aggressively doing exploration. We’re likely not going to get a chance to talk about Jerritt Canyon today, but we do have some interesting exploration things happening there.

We do hope to put out an update news release on Jerritt Canyon at the end of the year. If not end of the year, early 2026, but our objective is to hopefully have some news out on a go-forward plan of Jerritt Canyon by the end of this year. I do not want to talk too much about it on today’s call. I know we do get a lot of questions about Jerritt Canyon, but I would rather wait until we do come out with some further disclosure just to talk about the whole picture. We will be updating our resource estimates at the Navidad project as well in March of next year, which is obviously pretty exciting. As I touched on already, the Los Gatos input increase to 4,000 and the Santa Elena mill increased to 3,500. It is all coming into our budget in 2026.

We hope to talk further about that when we come out with our guidance for 2026. That was really the end of the presentation. I know the guys in Vancouver are watching for questions, so I’ll pass it on to Mani and the team in Vancouver. Yeah. I think, Keith, you’ve probably addressed a couple of the questions on Jerritt. The one question that’s coming up here is, are you doing any share buyback at these prices? We did some today. We did some yesterday. It concludes the web questions that we have. Okay. That’s good. Thanks for everyone’s time. For those who are listening to this after the fact, I encourage you to call into the office or send us an email. If you have further questions, we’re always happy and willing to answer any queries that come in from.

Interested investors and shareholders, this brings to a close today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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